Can Employer Deduct Employer PF Share If Not Mentioned In CTC

Hi,
Our company has recently started with the EPF scheme. My basic pay is exactly 6500/-INR. The employer contribution of PF is not mentioned in my offer letter or monthly payslip. Can the employer directly start deducting PF @ 24% per month without any changes to the overall CTC ?

The PF rules specify that salary can not be reduced for paying PF amount.
So, while 12% deduction from employee side will be deducted from your salary, the 12% of employer contribution can not be deducted.
If your ctc has other items of perquisites and reimbursements that are not shown in the salary slip, yes, the can adjust it there as they have decided your ctc and would not want to increase that. However, they can not lower your gross salary

Hi Ashish,

Let us make things little simple. I am sure it would have been little confusing.

Your Basic = 6500 and so as per the rule of 12% from each side, 780 + 780 ought to be deposited in your PF account.

one of the 780 is your contribution (deducted from your gross)

other 780 is their contribution (which might have been included in your ctc but it won't be deducted from gross)

Now let me explain you the funda in basic way. Since I do not know the components of your salary and how your company calculates, I would take a very basic and general format followed:

Basic:

HRA:

Medical:

Food:

------------------------------

GROSS

------------------------------

Your monthly Gross * 12 = Annnual Gross

Your Annual Gross is not your CTC.

Your CTC is more than just the gross.

People include several things in CTC which is Cost To Company

1) Annual GROSS

2) Gratuity (though you are eligible to receive gratuity after 5 years of service, your company is liable to deposit the annual contribution and it is a cash outflow for your funds. Hence it is added to CTC)

3) Their PF contribution i.e. 12 * 780. They are actually to shell out more money than just the 780 Rs. They ought to pay the admin charge towards PF and pension account, they have to pay for health insurance scheme and its account handling charges. So this figure might have been quoted higher accordingly. Depends from company to company if they wish to add all single pennies they spend on you as their CTC.

I hope this is able to make you aware that CTC is not just about the Gross.

When we calculate In Hand,

Gross - Professional Tax - TDS - PF Contribution (Your side) = In Hand.

(Please note that if you have any dues to clear to the company, company can deduct that as well. For example, EMIs of loans or advance salary taken from them)

So in your salary, they will show you 12% Basic as Deduction

and other 12% Basic as contribution on their part.

Hope this was suffice to clear your doubts.

Thanks for the quick replies, can you please cite me any legal document outlining the points you mentioned ?
Also,the company got PF registration just last month, but they say that since it had applied for PF in last July, employees are expected to deposit the entire backlog PF contribution for the past months of employment now itself. Is this a legal request ? I would really appreciate any sort of legal documentation to support this as most of my colleagues are in total dismay as their total backlog comes to around a month's entire salary.
Thanks in advance.

I think PF contributions to be made since the time the company becomes eligible to the act.

However seniors can guide better.

Another thing is there is no need to worry.

Each one of you will have a PF Account Number.

All the PF contributions, the interest earned there on are tax-free in your hand.

This act as a retirement solution and a fixed deposit to be utilized in the later part of our life.

You can always track the amount deposited in your PF Account.

I have shared link to the PF Act articles and have highlighted the important pointers below:

PF Act applies to any organization having more than 20 employees.

Once covered under PF Act, the company continues to be covered under the Act even if the employment drops below 20 thereafter at any time.

Employer not to reduce wages:

The clause states that in order to contribute for your PF, he can not lower the wages of yours. Now wages are payable to labours. Since you all are salaried employees, your gross should not go down. only 12% of your contribution is allowed as deduction so that your contribution is paid and deposited in your PF account. In order to pay the company's contribution, the company can however adjust from other components accordingly in such way that they do not reduce your gross, if your gratuity, bonus etc is covered in your ctc, such reduction do not violate the statutory compliance.

EPF Act 1952, EPF Act In India, EPF Rules And Regulations, EPF Rules For Withdrawal

http://epfindia.com <link fixed>

Dear Ashish_k29,
Here is a simple and to the point answer to your query.
Para 31 of Employees' Provident Funds Scheme 1952 states as under:
Para 31: Employer’s share not to be deducted from the members
Notwithstanding any contract to the contrary the employer shall not be entitled to deduct the employer’s contribution from the wage of a member or otherwise to recover it from him.
From the above it is very clear that your employer can not deduct the employer's share from your salary.
My humble request to all the members of forum that they should give response to any query to the point and not out of context. I do not know whether I can make such kind of request. Still I do it since the members respond without any study and out of context. In one of the thread on PF earlier, I had to write that there is a need of basic inputs / training session to the members.